The May 19 crash has undoubtedly been the focus of many media attention in the past two days. Many media, including many of our readers, have talked about the reasons for the crash. One view is that the crash may have been caused by the expectation of the Federal Reserve's early rate hike.
The expectation of the Fed raising interest rates ahead of schedule comes from a recent Fed meeting minutes. In this minutes, Fed officials mentioned that it would be necessary to discuss raising interest rates at some point in the future. After the minutes were made public, US stocks and commodities fell sharply, and we saw a drop of more than 40% on May 19. If the Fed really raises interest rates, then all investment markets around the world that are pegged to the US dollar (including digital currencies) are very likely to experience adjustments or even a bear market, but the key point is when will the Fed raise interest rates? According to public information, the Federal Reserve now has two reference criteria for deciding whether to raise interest rates: one is whether inflation exceeds 2% for a period of time; the other is whether the unemployment rate in the United States is under control (that is, whether the economy is improving). Only when both of these criteria are met will the Federal Reserve be very likely to raise interest rates. According to current data, although there are signs of rising inflation, the unemployment rate has not improved much. Therefore, I still feel that even if interest rates are raised, it will not come so quickly. To take a step back, if the Federal Reserve really raises interest rates unexpectedly for various reasons, it will take some time for the effect of the rate hike to be transmitted to the investment market. So on the whole, regardless of whether the Fed raises interest rates this year, I think there is a high possibility that there will be no major changes in liquidity in the market before the end of this year, which means that the market will still have ample funds. Under such circumstances, the abundant funds will definitely not lie in the bank with a near-zero interest rate, but will definitely look for investment targets everywhere. The investment targets visible in the market are still only: stocks, commodities, precious metals and digital currencies. And these markets are not cheap now. Even if the funds temporarily withdraw from a market, where can they go? I guess they will eventually return to the market again. This is my basic idea for judging the overall market trend. Of course, the market trend is definitely not something that people can predict 100%, so as we move forward, we still need to keep a close eye on changes in various factors and adjust our strategies at any time according to the situation. But so far, I think our strategy remains unchanged. Because the fundamental factors have not changed so far, we should try to look at the market fluctuations, including this big drop, as calmly as possible. A reader left a message saying that based on his years of experience in the financial market, he has a hunch that the bull market is not over yet. I have the same hunch, so when we encounter an emergency like 519, we first calmly analyze various objective factors and then ask our own intuition. If the basic judgments from both perspectives are consistent, there is no need to be too nervous. This intuition of the financial market is not some mysterious inspiration, but is accumulated in the process of struggling in the market. Over time, as you experience more accidents and learn more lessons, painful memories will slowly form in your mind, and you will be able to endure the torture and destruction you have experienced. Today I read some thoughts of Bao Erye about the 519 crash, and he talked about the five bull and bear markets he experienced and the moments of despair he had. He was glad that he had gritted his teeth and survived those moments that were worse than death, and he was grateful that it was because of those hardships that he had the wealth he has today. I think this should be the hardship that every digital currency investor must go through before reaping wealth. This is not our end, the ups and downs in the second half are still waiting for us. |
